Do We Work Too Much?

A student sent me a link to this article claiming that we would be better off with a thirty-hour as opposed to forty-hour workweek. I'm sympathetic to the argument: I think a lot of us are on the wrong side of the effort-outcome Laffer Curve, and we probably would do better if we followed the old adage and worked "smarter, not harder." While it seems simple to wave a magic wand, say "make it so," and get the world we want, reality is a lot more complicated.

If we passed a law making the marginal cost of hour #31 much higher than the marginal cost of hour #30 (wait a second--I think we've already done that with the health care law), it seems like it might lead to a better equilibrium. Maybe we're stuck in an inefficient signaling equilibrium in which everyone is signaling by putting forth levels of work effort that are higher than what would be socially optimal if we could all just get along.

The problem is that such legislation probably wouldn't address the fact that we signal. It would change the way the signaling manifests itself. Sure, we might work fewer hours, but we'd be willing to accept other stressors like less-pleasant working conditions in order to compete in a world with limited information. We have the institutions and norms we have for a reason. It may not be an articulated, designed reason, but the institutions and norms evolved to solve some problem. We would do well to tread lightly before thinking we can fix things with the legislative magic wand.

I invite readers to explore these questions. First, do we work too much? Second, what (if anything) can be done about it?

Comments and Sharing

One thing you could do is change the differential tax treatment of benefits and wages, right? One factor which drives employers to have high hours is fixed costs of employees, which are in large part benefits rather than wages, and those in turn partially come from tax reasons.

I'm more sympathetic to "direct" policies on work hours than the writers here, but we should start by getting rid of artificial distortions which push employers towards higher work hours in the first place (higher relative to what employees would choose in a labor-leisure tradeoff I mean).

Well, in the standard time use studies we have personal time (we cannot get someone else to sleep for us, take a shower for us), leisure (whatever isn't the other three), unpaid household production hours and paid market working hours.

And it's vitally important that we grasp the point of those last two. Working 10 hours a week less in the office in order to do 15 hours work on the vegetable patch is not a reduction in working hours. It's an increase.

Further, when you look at those two together, as one should, you'll see that today we all have more leisure time than just about any group in history. Because unpaid working hours in the household have collapsed in the past century or so.

We're all already working a great deal less because of efficient kitchens, washing machines, cars that don't need so much maintenance and so on and on.

With the burdens of our new socialized medicine many companies may want to cut back work hours. However, the workforce is shrinking! Population decrease may make employees a more valuable commodity.

I want to earn more! Many get paid for the hours they put in and want to work more to increase their earnings. So while it may be more efficient to get employees to work 25 hours than 50 the employee earns less.

So we have employees wanting to earn more and companies wanting to be more efficient. If we start enacting regulations to limit work hours we might destroy our economy and make everyone into criminals in their quest to get ahead. Look at places like Cuba and see what has happened there. Humans want to make their lives better and are willing to work longer to do so.

I think that Chris's point above is an extremely good one. If linking insurance to employers is encouraged by the tax code, then it will heavily incentivize employers to work as few people as many hours as possible.

I agree that Chris's point makes a lot of sense. But if this is the sole explanation, wouldn't you expect to see very high hours-worked more among low wage earners where the fixed overhead weighs heavily than among high wage earners, when I think you see the opposite?

In Japan and South Korea, the norm is supposedly to spend soul-crushing numbers of hours at work; if this zero-sum model is true, then shouldn't the working conditions in Japan & South Korea be much much better because all the signaling is being accomplished by the total working hours?

In the other direction, in Europe I understand many countries try to limit the work-week. If this is true, then the signaling burden must fall on other parts of the working condition and working conditions would presumably be positively Victorian in comparison to the paradise of America (never mind Japan & South Korea). Are the working conditions in those European countries dystopian to the point of stygian?

I would say Americans work too much. I think it's a relic from the Industrial Revolution, which was notably an anomaly in terms of how much work people were expected to do.

There are all kinds of studies about worker productivity in different kinds of work weeks, and generally speaking they support the idea that reducing the workweek by 25% wouldn't reduce output by 25%. A lot of the jobs with a more linear relationship between time and output are being automated, or have been already. A few professions - like doctors - are suffering from a lack of qualified workers already, and couldn't easily reduce work hours without reducing the amount of treatment being given (the solution to this, I think, would be giving certain routine medical tasks that doctors do to professional nurses or pharmacists, and also accepting some foreign qualifications to attract more immigrant doctors.)

So one thing to do would just be to promote awareness, to employers and employees, about the benefits of a shorter workweek.

Another problem that feeds into this is the fact that real wages have been dropping, and some people have to work more hours to get the same amount of stuff. Any kind of large-scale solution addressing income inequality and promoting things like the living wage would free some people from the need to overwork themselves just to get by.

A lot of jobs already have some kind of overtime rules attached to them, where you get a higher hourly rate for any hours worked in a week over 40, or for working on a weekend or holiday. These rules come from a variety of federal and state laws and in some cases from contracts negotiated with the help of labor unions. Shifting the federal law from 40 to 30 would probably prompt some companies to reduce worker hours, which would probably be bad for lots of workers (the ones who are easily replaceable) but good for others (the ones who are not, and would get automatic pay raises until their employees could find new hires) and could possibly raise employment overall. Without a corresponding raise in federal minimum wage this would be an extremely regressive move, favoring the more-educated and severely hurting the poor.

However, coupled with government assistance or guarantees for people who work 30 hour weeks - in other words, if 30 hours at any job was enough to at least support a single adult - moving the overtime cap from 40 to 30 would be workable.

Maybe the bad equilibrium isn't signaling based though: what if productivity is positively related to leisure time? Then it seems to me you could get a self-reinforcing spiral towards longer hours, which are necessary to produce the same output, but the longer hours cut into leisure time, which reduces productivity, and etc.

(I'm thinking here of people who are paid on salary with performance expectations. This also fits behavior of some grad students and junior faculty as a bonus.)

My project-oriented work is divorced from the 40 hr work week. But "We don't care how long you work, so long as X is in my inbox 8am Monday" doesn't translate into a leisurely academic schedule. Not when my competitor will do what is necessary to achieve that. I work long hours because I feel I have to to compete. If I didn't work long hours, I wouldn't be able to have my job at all. If we all got together and agreed to limit or rationalize our hours, like, say, OBGYNs, I'd prefer that. Our customers presumably wouldn't, but that's the point of collusion.

Also, responding to JLV, and this is introspection, so take it for what that's worth, but I think my per-hour productivity actually rises through quite high numbers - perhaps 80 hours per week. It only begins to drop off when I lose exercise, meals, and sleep. It's actually helped when I lose the ordinary distractions of life, even though I don't like that.

Clearly, there is some signaling in the number of hours worked for professional jobs, though I think that is fairly weak in the long run. The quality of those hours may be open for debate. And as Tim Worstall mentioned, a shift in what work is paid versus what is not paid is worth examining. Legislation is not the answer, because the needs and desires of individuals vary greatly. The 30 or 40-hour workweek is an artifact of legislation. For some, 80 hours is desirable, while for others, 30 hours is too much. Legislation couldn't possibly sort that out in an efficient manner.

I have no problem with a 40 hour work week. My gripe is about companies that offer two weeks (or less) vacation time per year. We don't need to jump to the German standard of six weeks per year, but workers probably would do better if they had three or four weeks to 'recharge their batteries'. I don't support government-mandated vacation time, but I feel that workers should push for more vacation time instead of higher pay or bigger benefits.

I agree that Chris has a critical insight: Working fewer employees harder allows the fixed costs per employee to be amortized over more work hours.

On the other hand, progressive taxation decreases the incremental value to the employee of each successive work hour. Fixed per-employee compensation (health insurance and similar) does that, too.

The ideal solution may be to get rid of the policies that produce those effects so that people -- as employers and employees -- are free to choose the number of hours worked without being "nudged" either up or down.

One big factor not mentioned is that for many professional jobs there is a time overhead required just to keep up with the status of projects / trained on tools / maintain regulatory required training and similar. Combine that with the fixed cost of benefits, and to make up an example say benefits cost 20 hours equivalent wages, and the overhead is 10 hours, then going from 40 hours (30 productive, cost = 60 hours equivalent) to 30 hours (20 hours productive, cost = 50 hours equivalent) would result in a 25% increase in the effective cost of productive labour (2 hrs equivalent cost / hour productive up to 2.5 hrs equivalent / hr productive). The more communication and team integration required, the larger this factor.

The question is to broad for a real answer. At best, workers would have to be categorized. Such categorization would bring out the protests over the inequality.

Some workers are paid for their time. They have skills but they are paid for making those skills available for some period of time. A doctor is paid for his time. Floor nurses are paid for the application of their skills over a set shift.

Others are more project based and paid more for their output rather than time on job.

Still others, work on spec. Entrepreneurs are here. They may work ungodly hours, have output but expect their compensation to come in a lump sum. Labor laws limit this category to some extent to those working for themselves but they are still working.

I expect their are other categories.

It is only by looking at how each category's compensation is achieved that we can hope to determine if they work to much and if anything can be done for it. Take the floor nurse. Cutting her hours to 30 isn't going to translate into higher output but will require an additional nurse to cover the other 10 hours. So reducing his hours would only result in less money for the nurse.

So one thing to do would just be to promote awareness, to employers and employees, about the benefits of a shorter workweek.

I am sure people know a lot about the benefits of leisure. If you want to educate them about some benefit to society performed by them if they work less you should also study the opposite proposition which is that they may benefit society more if they put even longer hours. Both lines of thought are fallacious because from an individual point of view the society makes no sense. He puts longer of shorter work hours in accord with his needs and preferences, not to benefit or harm an abstraction which has no real meaning for him.

I don't know if progressives like the authors of the study realize if everyone worked only 30 hours, there would be much less income tax revenue and thus much less to distribute to the poor.

Progressives should be in favor of letting, even encouraging, people to work as much as possible, as progressive taxation implies income tax revenue will increase more than proportionately.

Lastly, it is obnoxious to read that apparently anyone can be called an economist:

"Tim Jackson, professor of sustainable development at the University of Surrey, Robert Skidelsky, emeritus professor of political economy at Warwick University, and Juliet Schor, professor in the sociology department, Boston College, are among the book contributors."

So I have a PhD in economics, but I have things to say about health care, so call me a medical doctor.

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